The past few years have been a veritable roller coaster ride for the US housing market, and more and more homeowners have been turning to short sales as an alternative to avoiding foreclosure. However, unless you have an experienced short sale specialist to walk you through the process, you may find yourself the recipient of a startling surprise just when you think you are done with everything.

Free and clear? Not so fast.

You see, a common misconception is that a short sale will automatically leave the seller free and clear from further financial liability after their short sale is completed. Sadly, they could still be liable for thousands of dollars owed on the balance if their short sale doesn’t implicitly include loan forgiveness!

Not all short sales are the same.

A quick refresh on what a short sale is; basically, the bank signs off on a sale that is for a lesser amount than the seller still owes on the home. This is typically done when the market has changed, and the value of the house has fallen, making the loan “upside down”.

For example, a home valued at $300,000 is purchased for that amount, with the buyer putting down $20,000 and the remaining $280,000 being financed. The market shifts, and the house is now valued at $180,000, meaning the owner now owes $100,000 more than the home is worth, and cannot hope to sell the house for enough to cover the original mortgage.

A short sale allows the homeowner to sell the home for its current value, and if the process is done correctly, the bank is persuaded to forgive the balance of the debt. Unfortunately, for many who try and navigate a short sale alone, this is not the final agreement written in the legalese, and in many states the bank can later come back and sue the seller for the balance.

Make sure you get the best deal possible.

If you opt for a short sale in an effort to avoid foreclosure, make certain that your deal includes forgiveness off the extra debt or you could have it following you for decades. Having a reputable short sale specialist at your side can ensure that you only accept a deal that lets you walk away a free person, with no additional obligation to the bank. If you start proceedings early enough and manage never to miss a payment, you might even be able to salvage your credit!